Vodafone fined $82,000 for another consumer law breach

Photo / Brett Phibbs
Photo / Brett Phibbs

Mobile phone giant Vodafone has been fined $81,900 in the Auckland District Court this morning for misleading customers over its "$1 a day" mobile internet plan.

It was also ordered to pay $132 in court costs.

Vodafone was found guilty in September of misleading customers through its false advertising, less than two months after it was fined more than $400,000 for a similar offence.

The Commerce Commission laid a representative charge under the Fair Trading Act against Vodafone over its mobile internet plan, which the company defended in the Auckland District Court.

Vodafone's website said customers could pay $1 for 10MB of data and would be charged only for what they used.

It also promised: "If you use less than $1 a day we'll only charge for what you used".

But Judge Anne Kiernan found the company's advertising was "liable to mislead the public". This morning she described the company's conduct as "careless" and "inadvertent", rather than "reckless". She said the loss to customers was "impossible to estimate" but it must have been a moderate level.

The maximum fine for such conduct under the Fair Trading Act is $200,000. Judge Kiernan earlier recommended a starting point of $90,000, but took into account mitigating features including the company's willingness to cooperate with the commission, when passing sentence.

Vodafone today said it did not set out to mislead its customers.

"We take customer service very seriously and we are committed to giving our customers a great experience. But, unfortunately, we can't turn back the clock on some things that happened three years ago."

"The 1650 people at Vodafone genuinely want to do the right thing for our customers. We are doing our best to make things right by rolling out training and improving our sign off processes so we are clear in our communications."

The commission had said Vodafone misled customers during its $1 a Day campaign between July and November 2008. Commission lawyer Nick Flanagan said customers thought they were paying "$1 a day" for 10 megabytes of data but they were actually charged $1 after using only about 2 per cent of the 10MB allocation.

Flanagan told the hearing in August that three complaints to the commission suggested customers thought they would pay only a fraction of the $1 if they did not use all 10MB.

One complainant, Linda McCracken, told the commission, "I took this to be that if, for example, I used 5MB it would only cost me 50c and if I used 2.5MB it would cost me 25c."

Flanagan said there was no way customers would have known Vodafone's pricing structure.

Flanagan today described Vodafone's behaviour as "reckless" and not a minor oversight, but a "very real material breach of the act".

"My submission is that this was truly reckless conduct."

The commission asked that a fine of between $140,000 and $160,000 be imposed.

For Vodafone, Bruce Gray, QC, likened the billing plan to all-day parking. People who paid for all-day parking but left at 11am did not expect a refund on their remaining hours.

The $1 a Day promotion was similar in that clients paid $1 for up to 10MB, he said.

Gray said the company regretted the error, but rejected the commission's allegation that its conduct was reckless, saying there was no evidence to support this theory.

Judge Anne Kiernan said in September she was "satisfied beyond reasonable doubt" that the company had misled customers.

Vodafone was fined $402,375 for Fair Trading Act offences earlier this year around promotions of its Vodafone Live website, and faces four more charges from the 2006 to 2009 period, which it plans to defend.

The Auckland District Court heard how one Vodafone Live customer spent sleepless nights and another rang the company call centre in tears after being charged hundreds of dollars for a mobile internet service they thought was free.

-NZ HERALD ONLINE

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